Public services could cut costs by 15%

Author: The Guardian - Jan 25, 2010

Up to 15% of spending on public services is being wasted through duplication and inefficiency, according to research that suggests huge savings could be made without harming schools, hospitals and social care.

The government spent £73.6bn on services in London last year, but today's detailed analysis suggests about £11bn of that was wasted. If the figures were repeated across the country £15 in every £100 spent on public services could be saved, more than enough to tackle the fiscal crisis and dramatically reduce public debt.

The study, commissioned by London Councils, which represents local authorities in the capital, is the first to put a global figure on spending in the capital. That £73.6bn figure equates to about £10,000 for every Londoner. The analysis calculates spending from local and national government as well as quangos.

The technique used is called Total Place and is being championed by the Treasury in pilots in 13 areas to look at reducing costs. It looks at the needs of people in an area, how money is being spent and identifies where efficiencies could be made.

London Councils commissioned the accountants PricewaterhouseCoopers (PwC) to apply the Total Place technique to the whole of London and scrutinise spending on managing the health of people with long-term conditions, worklessness and the impact of antisocial youth.

A "complex web" of services is weakening public services, the report – seen by the Guardian – says. "Overcrowding of agencies can lead to confusion in delivery while different national goals often can conflict with each other," it concludes.

Merrick Cockell, chairman of London Councils, said: "We have long been aware that councils do not operate within a perfect system. The way public bodies are funded, and the number of different organisations working for similar or overlapping aims, unfortunately make waste inevitable.

"However, PwC's research has shown us a way to radically reduce London's burden on the public purse while still improving the services we offer Londoners. Amidst the ongoing debate around the public sector funding squeeze, we will be thoroughly examining their conclusions in the hope of setting out significant reforms for the capital in the coming months."

Total Place is being led by the former permanent secretary Sir Michael Bichard. Initial findings from the pilots suggested it could save 1% of public spending. With government spending on public services at £500bn in the UK as a whole, it could save between £5bn and £50bn annually.

Labour has promised to halve the £178bn public deficit within four years, while the Conservatives said they would act even sooner. The Conservatives have said they will support the Total Place initiative if they win the election.

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